Liverpool, 22 nd May 2014

1. Accentuate the Positive(s) Liverpool, 22nd May 2014 Presented by Neville White – Head of SRI Policy & Research Ecclesiastical Investment Management Ltd

2. Ecclesiastical Investment Management Ltd • Part of the Ecclesiastical Insurance Group founded 1887 • Owned by All churches Trust – all distributable profits to good causes • Top 10 UK corporate donor* • Ecclesiastical launched its first retail SRI fund in 1988 • Pioneer of SRI in the UK • Suite of six ethical retail and charity funds – the ‘Amity’ range • Total Assets Under Management £2.25bn** • Award winning, experienced team with a strong retail proposition • *Source: The Guide to UK Company Giving 2013, Directory of Social Change. • **Source: Ecclesiastical as at 31/12/13

3. Investing Positively

4. The Many Models of Socially Responsible Investing (SRI) SRI is an umbrella term which encompasses many approaches including ethical, responsible, sustainable, and environmental, social and governance (ESG) Negative criteria ‘ethical’ adopted by faith investors applying a moral dimension to investing Positive criteria emerge after 2000 following changes to UK pensions legislation

5. Applying Negative Criteria to a Portfolio • Applying negative criteria is (relatively) straightforward • Identifies moral imperatives, but adds little value to process • Does not allow investor to work for change • Does not allow engagement to raise business standards • What would a sustainable tobacco company look like?

6. Advantages of Applying Positive Criteria to a Portfolio • Supports construction of holistic, integrated investment methodology • Represents a ‘complete’ active strategy • Material ESG risks should be seen as core management issues • Adds value • Reduces long-term risk • Supports long-term investment horizons • Provides engagement platform for change • Dovetails with wider UK Stewardship Code responsibilities

7. Our SRI Process – an Integrated Approach • Negative Screen • 10% Threshold: • Alcohol Production • Gambling Operations • Pornographic or Violent Material • Strategic Armaments • Tobacco Production • Other Factors: • Animal Testing (cosmetics) • Intensive Farming • Positive Screen • Business Practices • Community Relations • Corporate Governance • Human Rights • Labour Relations • Environmental Management • Healthcare • Education • Urban Regeneration Positive criteria may serve as a brake on investment; e.g. no oil or mining

8. Our Nine Positive Investment Pillars • Each stock is monitored and assessed against the nine positive criteria • Essentially we are looking for each stock to earn its place in the portfolios • The investment case and the sustainability case are given equal weight • Six areas of business behaviour (risk) • Three sustainable sectors • Identifies engagement need • BUT how do you assess the environmental, social and governance positives? • Positive Screen • Business Practices • Community Relations • Corporate Governance • Human Rights • Labour Relations • Environmental Management • Healthcare • Education • Urban Regeneration

9. Evaluating Environmental, Social and Governance (ESG) Positives • Unlike negative criteria, positives can be subjective and challenging • Materiality, and risk weighted factors of primary importance

10. Research, Research, Research EIM employs Sustainalytics as its principal ESG data research provider One of several distinctive ESG providers that analyse ESG risk (EIRIS; MSCI etc.) Quantitative and qualitative data; controversies monitor; peer group ranking; ESG ratings Provides first stage ‘data dump; and materiality analysis Secondary research conducted in house including engagement

11. SRI Company Example – Boustead Singapore Long established high end engineering company Overlooked due to its complexity Exposure to global energy and water infrastructure spending, industrial property Attractive business model Company and management stability Strong balance sheet and order book Deep value play on 12M Forward PE of 15.8X and yield of 2.7%

12. Boustead Singapore – Green Tech Leader International water & wastewater engineering specialist • 800 industrial and municipal treatment plants in 58 countries • Wastewater treatment & safe return • Municipal – providing clean drinking water • Industrial – improving resource efficiency Water treatment solutions for all processes • Disinfection • Deionisation • Membrane • Degasification Engineers water solutions for oil & gas, chemicals, power generation, electronics, food & beverage and tourism sectors Leaders & award winners in green building design and operation Health and safety leaders and award winners • Championing H&S with suppliers and contractors Strong sustainability play: water & treatment theme

13. Monitoring the Direction of Travel - Statoil Originally a regional oil company Strong management, leaders in health safety & carbon capture Low human rights and environmental risks Business changed direction Seeking to exploit oil sands, arctic drilling and diversify geographic exposure across Africa Dramatically changed risk profile of company Whilst still a ‘best in class’ option, disinvested from Amity Funds

14. Engagement Case Study

15. Investing in Bullion – is it Ethical?

16. Investing in Bullion – is it Ethical? Mining and extractives avoided as part of failing positive criteria tests Fund managers had appetite to invest in an ETF bullion fund for diversification reasons Ethically, bullion could be viewed as ‘benign’ i.e. a store of value But we asked – where does the gold come from and is it ethical? c40% of supply is recycled c15% is artisanal or illegal

17. The rise and rise of Gold ETFs

18. Unique Characteristics of Gold Parallel Currency 50% Jewellery Store of Value 10% Industrial Investment Multiple Participants Fuelling Conflict Toxicity Mainstream Mines Traceable Waste 15% Artisanal Mines Human Rights Corruption Dirty Gold Pollution

19. Gold – Accentuating the Positive We engaged intensively with the World Gold Council The only investor to engage with the WGC on conflict free gold Industry increasing its efforts around eliminating the worst practices Kimberley rejected as a model as gold is not easily identifiable Industry started from scratch on a new verification and accreditation standard • ConflictAssessment • Company Assessment • Commodity Assessment

20. Gold – Accentuating the Positive • EIM led investor engagement with WGC on global conflict-gold standard • Held two seminars for investors in London to outline the Standard • Offered advice on draft Standard • Concluded Gold ETF could be held given the contribution of engaging • Engagement and informed contribution significantly added value to our investment • We, most importantly… Ensured high levels of due diligence and research were employed for clients investing in the Amity Funds.

21. Questions and Answers • Thank You!

22. Support Team Tel: 0845 604 4056Email: ifa@ecclesiastical.com www.ecclesiastical.com/ifa • Chris King – Regional Sales Manager+44 (0)7767 343 916chris.king@ecclesiastical.com • This presentation has been prepared by Ecclesiastical Investment Management Limited for Financial Advisers, other intermediaries and other investment professionals only. It is not suitable for private individuals. • This document has been produced for information purposes only and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. A full explanation of the characteristics of the investments is given in the Key Investor Information Document (KIID). Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, Ecclesiastical Investment Management own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecast made will come to pass. The value of any investment, and the income generated from it may fall as well as rise and will be affected by changes in interest rates, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which it invests. Past performance should not be seen as an indication of future performance. • Ecclesiastical Investment Management Limited (EIM) Reg. No. 2519319.  Registered in England at Beaufort House, Brunswick Road, Gloucester, GL1 1JZ, UK.  EIM is authorised and regulated by the Financial Conduct Authority (FCA No. 527473).